Boeing Airplane Manufacturing Company Essay Example | Topics and Well Written Essays - 1250 words

Boeing Airplane Manufacturing Company - Essay Example The paper tells that all relevant and reliable information are needed to make a decision about whether to pursue developing and manufacturing a very large commercial transport (VLCT). First, Boeing needs the prior revenue information as a basis for determining whether to pursue developing and manufacturing a very large commercial transport or VLCT unit. The business will not survive without revenues. Thus, the issue on whether to produce the super jumbo (A3XX) or the larger 747 version is grounded whether revenues are generated. Boeing needs to determine the cost and expense information to serve as a basis for determining whether to pursue developing and manufacturing a very large commercial transport or VLCT unit. Boeing Airplane Manufacturing Company must determine the total cost of buying each airplane part from its many suppliers. Likewise, the company must know the cost of labor to produce each airplane unit. Lastly, the Boeing Airplane Manufacturing Company must know the total manufacturing cost of producing each very large commercial transport or VLCT unit. The cost portion will contribute to better Boeing Airplane Manufacturing Company decision making in terms of pursuing the super jumbo or larger 747 version production. Boeing needs to scrutinize the amount of profits generated as a basis for formulating more effective finance decisions. The company will proceed with the manufacture of the Boeing plane only if the net profit crops up. In the net profit computation results to a net loss figure, the company must drop the plan to develop and manufacture a very large commercial transport (VLCT) unit. ... The $20569 subtotal revenue indicates that the company may generate enough very large commercial transport or VLCT unit revenues to generate the required bottom line net profits. In terms of relevance of information, the profit information has high relevance value in relation to the decision to develop and manufacture a very large commercial transport or VLCT. Boeing Airplane Manufacturing Company will not pursue the production of very large commercial transport or VLCT units if net profits are not realized within one or more accounting periods. A net profit figure discourages management from pursuing or continuing the production of very large commercial transport or VLCT units. The company must exert efforts to ensure net profit crops up during each accounting period. (3) In terms of reliability, the revenue and profit information has high reliability. The case study shows that the company generated $20,569 in 1993E. Likewise, the revenue information shows that the company consisten tly generated profits from 1989 to 1993E. The information persuades management to predict the very large commercial transport or VLCT unit will generate revenues (Weetman, 2006). In terms of reliability, the cost and expense information has high reliability, including 5.5 % risk free interest bonds. The case study shows that Boeing Airplane Manufacturing Company buys the airplane parts (wings, tires, etc.) from several suppliers. The cost information, including the $5 billion to $20 billion amount, shows whether the company’s revenues are high enough to generate gross profit figures. The gross profit result shows whether there are enough funds to pay for the Boeing Airplane Manufacturing Company marketing and